Investing.com – The US dollar gained slightly on Friday, with traders expressing a level of caution ahead of the expected monthly jobs report, while the euro continued to show weakness .
At 05:00 ET (10:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.1% higher at 105.827, near levels three weeks after falling 0.6% overnight.
Payrolls could lead to dollar direction
Dollar bulls were partially halted this week after and weekly signs of a weak labor market, suggesting the Federal Reserve has room to cut interest rates further.
However, Fed Chairman Jerome Powell, in a speech earlier this week, said that the US economy is stronger now than the central bank expected in September when it started reducing interest rates.
The market is still expecting a rate cut in December, but the official jobs report, due later in the session, could move the dial.
Projections are based on an increase of around 200,000 to jobs in November, reversing from a small gain in October with the effect of 12,000, while that is seen to increase to 4.2% from 4.1%.
“The market is sitting long on the dollar after two months of Trump-powered rallying.” Investors like the dollar's story into 2025, but the question is whether they need to make a position-driven shake-up first. Today represents a threat to these positions in the form of the November jobs report,” said analysts at ING, in a note.
Euro hit by weak German data
In Europe, it fell 0.1% to 1.0575, with the single currency hit by data showing an unexpected fall in October, indicating further weakness in the economy of the euro area leadership.
Production was down 1.0% in October from the previous month, following an upwardly revised decline of 2.0% in September and an increase of 2.6% in August.
“This means that the industrial economy is still in recession,” the German economy ministry said in a statement.
This overall grew by 0.4% quarter-on-quarter in the third quarter, data showed earlier on Friday, an annual gain of 0.9%.
This modest growth marks another rate cut by the European Central Bank next week, and the market is pricing in more than 150 basis points of discounting by the end of 2025.
Meanwhile, traders have to factor in more political unrest in France after Prime Minister Michel Barnier lost a no-confidence vote earlier this week, with President Emmanuel Macron poised for a new prime minister. put in quickly.
The collapse of the government leaves France with no clear path towards reducing its budget deficit, credit rating agency Standard & Poor's said on Thursday.
“With less than four weeks until the end of the year, and even less time left until the December 21 deadline to pass the budget, regardless of whether a new government is formed, S&P Global Ratings believes that there will likely be an amended budget in 2025. the plan to pass before the end of the year 2024 is low,” he said.
trading 0.1% higher to 1.2763, with sterling helped by data showing UK house prices rose for a fifth month in a row in November, pointing to a growing economy better.
The mortgage lender said prices rose 1.3% in the month for the biggest increase so far this year, pushing the annual rate of growth up to 4.8%, the strongest since November 2022 .
Asian currencies were devalued
In Asia, most currencies were traded on Friday ahead of key US jobs data.
it gained 0.3% to 150.57, rose 0.2% to 7.2709, and fell 0.4% to 0.6426.
rose 0.5% to 1,419.96, with the pair set to rise 1.8% this week, its biggest weekly gain since early April, after President Yoon Suk-Yeol's failed attempt to legislate deploy arms in the country.
it slipped slightly to 84.680 after the benchmark interest rates remained unchanged, as expected on Friday, but cut the reserve ratio requirement for local banks.
The central bank also lowered its economic growth projection for the current fiscal year and raised its inflation estimate.
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